An Impact of Liquidity on the Profitability of Commercial Banks in Nepal (A Case Study of Agriculture Development Bank Limited and Nepal Bank Limited)

Authors

  • Mukti Prasad Neupane Madhyabindu Multiple Campus, Kawasoti
  • Chet Narayan Sapkota Madhyabindu Multiple Campus, Kawasoti

DOI:

https://doi.org/10.3126/madhyabindu.v10i1.75614

Keywords:

Liquidity and Profitability, Current Ratio, Cash Reserve Ratio, Cash and Bank Balance, Interest Sensitive Deposit

Abstract

The study examines the relationship between liquidity and profitability in 20 Nepalese commercial banks, focusing on Nepal Bank Ltd. and Agriculture Development Bank Limited. The research used descriptive and causal-comparative approaches, analyzing financial indicators like return on assets (ROA), return on equity (ROE), CR, CRR, CBBISD, and IGSCA. Results showed that liquidity indicators significantly influence profitability, with CR negatively influencing ROA and ROE, CRR weakly influencing ROA and ROE, and IGSCA showing limited influence. The findings underscore the importance of effective liquidity management for enhancing profitability and recommend stable liquidity practices to reduce variability

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Published

2025-02-17

How to Cite

Neupane, M. P., & Sapkota, C. N. (2025). An Impact of Liquidity on the Profitability of Commercial Banks in Nepal (A Case Study of Agriculture Development Bank Limited and Nepal Bank Limited). Madhyabindu Journal, 10(1), 15–38. https://doi.org/10.3126/madhyabindu.v10i1.75614

Issue

Vol. 10 No. 1 (2025)

Section

Articles

License

© Madhyabindu Journal

The work is simultaneously licensed under a policy and procedure of Madhyabindu Journal, which permits others to distribute the work with an acknowledgement of the work's authorship and initial publication in this journal. With an acknowledgement of its original publication in this journal, authors can enter into separate, extra contractual arrangements for the non-exclusive dissemination of the journal's published version of the work (e.g., posting it to an institutional repository or publishing it in a book).